Domestic steel producers adjusted their scrap prices as of July 19, which caused the general market prices to trend downward.
Steel producers stated that their profit margins were under pressure and that they tended to reduce their scrap purchases. This situation led to a decline in steel billet prices and a cautious atmosphere in the market in general. Particularly weak demand for final products and increasing competitive conditions negatively affect the profitability of steel producers.
The scrap market is expected to remain weak next week. It was reported that the domestic scrap market remained stable this week due to the horizontal course of international scrap prices and the normal shipment policy of suppliers. However, the recent increases in steel bar prices attracted attention. In some segments, the market showed restocking purchases.
With the decrease in scrap demand of steel companies, the average scrap purchasing prices of major steel companies also decreased. Average purchasing prices, especially for heavy scrap, decreased significantly compared to last week.
The decline in futures prices and the simultaneous decline in spot prices due to the weakening of steel demand during the off-season period further squeeze the profit margins of steel companies. This situation leads steel companies to be more cautious in their raw material purchases and suppresses the increase in scrap prices.
Currently, resources in the scrap market are limited, many mills have limited purchases, and overall inventory levels are low. In addition, high temperature conditions negatively affect scrap processing efficiency, making it difficult to increase short-term purchases. However, forward resource recovery and supply continues to provide some support to scrap steel prices.
Scrap markets in different regions of China also show different dynamics. For example, in Eastern China, the deterioration of market confidence and the decrease in the arrival volume of processing sites partially prevent the decline in scrap prices. In other regions, risk aversion and low stock preservation efforts are noteworthy.
Scrap prices across China vary between approximately 2500 yuan/ton (343 USD) and 2900 yuan/ton (398 USD).
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